NCPA - National Center for Policy Analysis

Where Did All the Workers Go?

June 9, 2011

The labor force -- those who have a job or are looking for one -- is getting smaller, even though the economy is growing and steadily adding jobs.  That trend defies the rules of a normal economic recovery, says the Associated Press.

Economists think some of the missing workers have retired, have entered college or are getting by on government disability checks.  Others have probably just given up looking for work.  By the government's definition, if you quit looking, you're no longer counted as unemployed.  And you're no longer part of the labor force.

  • Since November, the number of Americans counted as employed has grown by 765,000, to just shy of 139 million.
  • The nation has been creating jobs every month as the economy recovers.
  • The economy added 244,000 jobs in April.

But the number of Americans counted as unemployed has shrunk by much more -- almost 1.3 million -- during this time.  That means the labor force has dropped by 529,000 workers.

  • The percentage of adults in the labor force, or the participation rate, is 64.2 percent, the smallest since 1984.
  • Their decision not to seek work means the drop in unemployment from 9.8 percent in November to 9 percent in April isn't as good as it looks.
  • If the 529,000 missing workers had been out scavenging for a job without success, the unemployment rate would have been 9.3 percent in April, not the reported rate of 9 percent.
  • And if the participation rate were as high as it was when the recession began, 66 percent, in December 2007, the unemployment rate could have been as high as 11.5 percent.

Some who have left the job market are getting by on government checks, particularly Social Security's program for the disabled.  More than 8.3 million Americans were on Social Security disability last month, up 1.2 million, or 17 percent, from the end of 2007.

Source: Paul Wiseman, "More Job Seekers Give Up, Reducing Unemployment," June 2, 2011.

 

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